Discuss the differences between dissolution of partnership and dissolution of

partnership firm.

Dissolution of partnership is different from the dissolution of firm. Partnership can be

dissolved by mutual consent, because of the expiration of the prescribed time, the death of the
one partner, the insane, the bankruptcy of either partner, or by the courts for any good reason,
such as dishonesty of one partner against the rest, or disability caused by convicted of any
crime, only involves a change in relationship partner but did not end up in the firm. Partner
may withdraw at any time if there is no time to continue the partnership agreement, but must
give proper notice of intention to the other partners. If the time for the continuation of the
partnership is called, however, a partner may withdraw at any time, but is responsible to the
firm for damages caused by breach of promise. If a partner dies the surviving partner only has
a right to settle the business. To heirs and representatives of the law, only need to submit a
business account.

The term dissolution means come to the end or termination. Dissolution of partnership among
all partners of a firm called dissolution of the firm. The dissolution of the firm means that the
firm closes its business and comes to an end. Dissolution of partnership firm reflects the full
details on partnerships among all partners. At the dissolution of the firm, business firms
ceased to exist since its affairs will be increased by selling assets and to pay the liabilities and
fulfill the demands partners.

After the admission, retirement and death of the existing partnership ended, but the business
firm continue under the new agreement. When the firm decided to wind up business
operations under any conditions specified, it stands dissolved. Dissolution of joint partnership
the remaining partners may agree to conduct business under new agreement. On dissolution
of the firm the books of account are closed. All assets and liabilities are transferred to an
account is called realization account. This account records the realization of assets and the
payment of liabilities. When the partners decide to discontinues the business of the firm, it
becomes necessary to settle its accounts. For this purpose, it disposes off all its assets except
cash and bank balances for satisfying all the claims against it.

Distinction between Dissolution of Partnership and Dissolution of Firm

Basis
1. Termination of business

Dissolution of Partnership
No, the business is not
terminated.

Dissolution of Firm
The business of the firm is
closed.

2. Settlement of assets and

liabilities

Assets and liabilities are

revalued and new balance
sheet is drawn.

Assets are sold and realized

and liabilities are paid off.

3. Courts Intervention

Court does not intervene

because partnership is
dissolved by mutual
agreement and through the
process of reconstitution.

A firm can be dissolved by

the courts order.

4. Economic Relationship

Economic relationship may

remain and changes.

Economic relationship
between the partners comes
to an end.

5. Closure of books

Does not require because the

business is not terminated.

All books of accounts are

closed.